Comment by aazaa | Hacker News Reader

Comment by aazaa | Hacker News Reader

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> That’s when Lebanon’s cryptocurrency market took off, along with the OTC system run by traders like Awad. The OTC ecosystem here largely operates using Tether, a cryptocurrency pegged to the U.S. dollar and therefore subject to fewer price fluctuations. The process works like this: A client who wants to buy cryptocurrency will usually open a wallet on an exchange (the most popular in Lebanon being Binance) and then meet with an OTC dealer to hand over cash dollars. The dealer will send the same amount of Tether — minus a commission ranging from 0.5%–5% — to their account via a peer-to-peer transaction. The client can then pursue whatever crypto-investment strategy they see fit with the USDT in their digital wallets.

From the frying pan (domestic currency in shambles), into the fire (crypto waiting to implode).

Tether's many problems have been documented elsewhere. What this implies is that the funds being spent by the Lebanese in this story are very likely going into financial speculation, not day-to-day requirements like buying food. And they're using the absolute worst vehicle for doing that.

A ticking time bomb.

I think it's wrong to assume its just speculation. Lebanon is a troubled country, and if I've heard correctly their local currency is inflating. So they could just be trying to protect their savings (earned from their labor in many cases no doubt) from being devalued. Perhaps they also want it protected by government confiscation. The might also just keep their funds in USD stable coins (tether is not the only one).

The article mentions the Lebanese pound has "lost more than 90% of its value". For an equivalent loss in value from holding USDT that would mean that each USDT is only backed by 10 cents of value? I mean there are certainly arguments to be made about how much value is actually backing USDT but to claim that it's only 10% seems way off. I think people would be shocked and there would be crypto-wide panic if USDT dropped to 85 cents on the dollar. If USDT 'collapses' that does not mean that one USDT is worth 0$ only that the value drops enough that it causes a structurally significant sell-off. This is what people worry about, not USDT becoming worthless. If I'm Lebanese, yes I'll take the USDT

To give maybe a good parallel take a look at clients of Bernie Madoff's fund. This was by all measures considered a 'collapse' and a 'disaster' but when all was said and done clients still recovered 70-80% of their claims. Granted it took a long time ~10yrs or so but still a very far cry from 10%

It look like cryptocurrency is used as a remittance rails, so the actual people in Lebanon receive dollars. It's a great use case.

People say this stuff as if the fiat system isn't a corrupt bomb that's constantly blowing up.

Capitalism is the corrupt bomb that keeps blowing up. Fiat money is just on of its many mediums with which is props itself up after it explodes.

But crypto is also capitalist, and it explodes a lot more often than regulated, fiat commerce.

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